It’s a long road back to ‘normal’
.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Dear Mr. Berko:
Now that the economy seems to have stopped going down, do you have any idea how long (six months, a year) before it returns to normal? I’ve been lucky and have kept my job but had to accept a cut in work hours until business gets better. My wife lost her job of 14 years and works part time as a cashier. It’s really tight to make ends meet, especially with three children, three auto payments, a mortgage, plus Visa, a home equity loan, payments on our motor home, our boat and MasterCard. I know you can’t help me, but if I can’t see light at the end of the tunnel soon, I may have to declare bankruptcy.
E.P., Aurora, Ill.
Dear E.P.:
Pink slips are still littering our economy like losing tickets around the betting windows at Pimlico Race Course. Observers suggest this is a consequence of a Congress that counterproductively devotes excessive energy, time and resources to health-care legislation to cover 13 percent of the population, rather than healing a very sick economy with 10.2 percent unemployment, which is a more immediate and serious imperative.
It will be a long time until employment returns to “normal.” This is a problem of biblical proportions. Unfortunately, the 535 baby kissers in Congress lack the intellect to grasp the problem.
Profits among many companies are not down as much as many analysts projected, and some companies actually have improved earnings beyond Wall Street’s expectations. In almost every instance, these companies succeeded because they reduced costs and improved operating efficiencies. And in that process, Corporate America laid off more than 7.2 million workers. They learned how easy it was to produce higher earnings with 9,000 employees, where two years ago they required 10,000 employees. Though that’s good for the stockholders and management, it does not bode well for Mr. and Mrs. American Worker, whose jobs support 71 percent of our economy.
So it’s very likely that most folks who are now unemployed may continue to remain unemployed for a very long time. Frankly, I believe that 7 percent to 8 percent unemployment may become the norm.
We have to wait longer at Walgreens to pay for a purchase, because there’s only one person at the register rather than two. Customer service at American Express is now an oxymoron, because AMEX employs fewer people. It now takes 18 minutes to make a reservation at the Embassy Suites; there are fewer open checkout lines at Costco; you have to wait 45 minutes to make a phone reservation with Southwest Airlines; and it’s nearly impossible to locate sales help at Dillard’s.
The three most important measurements of our economic health are housing, inventories and autos. It’s going to be quite a while until they recover. I strongly doubt that unemployment will return to the 2005 and 2006 level of 4.5 percent. And because the consumer is responsible for 71 percent of our gross domestic product (GDP), it’s gonna be a heck of a long time before the GDP returns to higher levels.
Those few employees who do return will earn less than they did prior to being “pinked.” Consequently, those who do return to the work force will have less disposable income to spend on goods and services. Consumers will not be purchasing 15 million vehicles a year, and housing statistics will not reach 2006 or 2007 levels, so there is no reason for inventories to be as high as they were several years ago.
Too many people seem to be waiting for some mythical rebound or a messiah to swoop down on the economy and bring back the good times. It ain’t gonna happen. So dig in and hang on, because a lot of us will have to sweat it out, reduce our standard of living and lower our expectations. And don’t take a long weekend, because your employer may discover that he can get along very well without you.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, Fla. 33775 or e-mail him at mjberko@yahoo.com. © 2009 Creators.Com
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